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The 'shadow banking system' refers to a system of credit-provision occurring outside of the official regulatory perimeter of commercial banks. Facilitated by securitization vehicles, mutual funds, hedge funds, investment banks and mortgage companies, the function and regulation of these shadow banking institutions has come under increasing scrutiny after the subprime crisis of 2007–8. Matthias Thiemann examines how regulators came to tolerate the emergence of links between the banking and shadow banking systems. Through a comparative analysis of the US, France, the Netherlands and Germany, he argues that fractured domestic and global governance systems determining the regulatory approach to these links ultimately aggravated the recent financial crisis. Since 2008, shadow banking has even expanded and the incentives for banks to bend the rules have only increased with increasing regulation. Thiemann's empirical work suggests how state-finance relations could be restructured to keep the banking system under state control and avoid future financial collapses.

Considers how globalization shapes the regulation of finance

Explains why regulation failed but also when and why it worked

Analyzes the rise of shadow banking in Germany, the Netherlands and France as well as the better known cases of the US and UK

Reviews & endorsements

'Ten years after the Great Financial Crisis, with regulations remaining mostly unchanged, this book offers a new paradigm for designing financial regulation. Thiemann situates the rise of shadow banking in ill-designed and often highly fragmented regulatory structures - an ideal breeding ground for regulatory arbitrage. Based on a careful comparative analysis of accounting governance in several countries, he argues for greater proximity of regulators to the regulated and a diversity of perspectives to avoid cognitive capture. Even more daring, Thiemann argues that regulators should not fall for the demand by the industry for certainty but instead should force regulatory uncertainty on the financial engineers to keep them on course. When the old regulatory structure inevitably fails us again, we will be better prepared to put a new regime in place and this book offers a new, empirically grounded, strategy.'
Katharina Pistor, Edwin B. Parker Professor of Comparative Law, Columbia Law School

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Product details

Date Published: June 2018

format: Hardback

isbn: 9781107161986

length: 302pages

dimensions: 235 x 158 x 21 mm

weight: 0.57kg

contains: 6 b/w illus. 7 maps

availability: In stock

Table of Contents

1. States and the regulation of a globalized finance 2. The ABCP-market at the heart of shadow banking and the financial crisis 3. How to explain the absence of regulatory action on shadow banking 4. The transformation of US financial markets since the 1960s and the emergence and growth of the ABCP market 5. In the shadow of Basel 6. Converging procedures or standards? The challenge of the IASC and domestic pathways to SIC 12 7. Steering finance towards prudence – the role of banking regulators in the governance of compliance decisions 8. The fate of the bank-based shadow banking system post-crisis 9. Changing the façade, but not the structure: the continuing threat of shadow banking References Index.

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